Cox plans death of death tax

Paul Clinton

Rep. Chris Cox declared victory Monday in his decade-long battle

to permanently wipe out the estate tax, which has sapped the

inheritances of well-to-do families since the Civil War.

Cox, who introduced his first bill to eliminate the tax in 1993,

predicted that new faces in Congress -- many of whom are Republican

-- should put the repeal over the top.

“Now that President Bush has a working majority in the U.S.

Senate, that will make a great deal of difference,” Cox said Monday.

“As a result, you can count on enactment of permanent death tax

repeal during the first six months of 2003 and probably in the first

quarter.”

Bush’s landmark tax-cut legislation, passed in 2001, will raise

the current exemption steadily until 2010, when it would return to

2001 levels. Up until the end of 2001, families could collect up to

$675,000 from relatives who die without paying a dime in taxes. In

2002 and 2003, that ceiling would be $1 million.

Steady increases will raise the exemption to $3.5 million in 2009,

but lawmakers can bring it back to $675,000 for 2011.

For estates valued above the exemption level, the financial

penalties can often be harsh.

An estate valued at between $3 million and $5 million today would

be levied about $1 million in taxes. Heirs are often stunned and

angered when they realize they owe such a huge tax bill, Newport

Beach financial planner Dennis Renter said.

“It’s called the death tax because it’s ugly,” said Renter, a

planner with Associated Securities Corp. “Most people think it’s

repulsive and rude for the government to take one more tax [upon a

person’s death] in addition to all the others.”

Heirs must fill out the Internal Revenue Service’s labyrinthine

Form 706, which requires a series of appraisals of the value of all

the assets that can’t be quickly sold to raise cash.

Cox’s persistent efforts to remove the tax may pay dividends now

that Republicans control the White House, Senate and House, he said.

It would be a victory nearly 150 years in the making. The federal

government instituted the tax at the end of the Civil War to pay off

war debt by taxing widows’ inheritances. It has subsequently been

raised several times, mostly after wartime.

In the meantime, Renter recommends people draw up a living will

and trust to help administer their assets.

* PAUL CLINTON covers the environment and politics. He may be

reached at (949) 764-4330 or by e-mail at [email protected].